Housing affordability can’t be solved under the status quo

Housing affordability can’t be solved under the status quo. There are too many vested interests in keeping house prices high. The capital losses required to make housing “affordable” relative to median household incomes around the country are too damn high.

Thus, housing can never become affordable unless there is an enormous reduction in demand or increase in supply. The supply side can’t keep up – new houses are an order of magnitude below that needed to impact prices and deliver the kinds of houses newly formed households both want and can afford.

What does the phrase “housing affordability” actually mean? That surely depends on who is doing the complaining.

From the perspective of an older person, “housing affordability” means capital losses, the value of their main asset going down instead of up, up, up.

From the perspective of a politician, “housing affordability” means sound bites, and occasional pearls of wisdom that can never actually be implemented at sufficient scale to solve the “problem”.

From the perspective of a “first home buyer” housing affordability means stretching their median household income to Ponsonby as opposed to Papakura. Who knows? Is there even a stock meme for what constitutes a “first home buyer” demographic profile?

It’s not clear that any policies attempting to address the housing affordability issue can actually achieve their intended policy objective without accepting that they will impose capital losses on people already owning houses. This means that because it’s not politically possible it’s not actually going to happen.